DNA REALTY GROUP's Blog
Adjustable rate mortgages are also known as “ARM” loans. These are home loans with monthly payments that move up and down along with interest rates and the market. There’s different periods that occur throughout the time of the adjustable loan including an initial period where the rate is fixed for a certain amount of time. The rates will change along with preset intervals of change.
Rates Start Lower Than Fixed Rate Mortgages
Interest rates during the fixed rate period of an adjustable mortgage are usually lower than that of fixed-rate mortgages. The most common type of adjustable rate mortgage is called the 5/1 ARM. This means that the rate is locked for a total of 5 years before it becomes truly adjustable. After the 5 years the rate will change every year. Other forms of ARM loans are the 3/1, the 7/1, and the 10/1.
Rate Indexes And Margins
Following the fixed-rate period, the interest rate adjusts with what’s titled the index interest rate. This rate is set by the market and is released periodically by an independent party. Since there are a variety of indexes, your loan will state which index your adjustable rate mortgage will follow. To set your exact rate, your lender will look at the index and then add a number of percentage points that has already been set in place. This is called the margin. For example, an index rate of 2.5 percent and a margin of 2 will equal an interest rate of 4.5 percent. As the index changes, this number will go up and down.
Adjustable Rate Mortgages Come With Caps
If you do decide to go with an adjustable rate mortgage, you should know that you’re protected from extreme rate increases. These loans come with caps that limit the amount that both rates and payments can change by. There are several different kinds of caps including:
Periodic Rate Cap
This limits the amount that an interest rate can change from one year to the next.
Lifetime Rate Cap
This type of cap limits how much the interest rate can change overall throughout the life of the loan.
Payment Rate Cap
This limits how much the monthly payments can rise over the life of the loan in a dollar amount. This is different than other caps, since it denotes dollars instead of percentage points.
Is This Type Of Loan For You?
Adjustable rate mortgages can be good, depending on the state of the economy and your own financial situation. Stay educated and shop around in order to get the best rates available for you.
A month passes quickly, especially when you're faced with the responsibility of paying a five-figure or larger mortgage each month. Knowing that a $1,000 or more bill is coming in the mail, electronically or in print, could keep you up at night.
Paying a mortgage shouldn't leave you feeling anxious and worried
The only way to let go of all thoughts about paying a mortgage is to pay your entire mortgage off. That's not always easy if you just bought a house. With focus and action, there are things that you can do to release year round mortgage worries.
Giving yourself permission to accept how much financial responsibility you've taken on is a good first step. So too is remembering other times when you were concerned that you'd taken off more than you could chew only to find out that you had what it took to meet those demands. To stop worrying about your mortgage, you could also:
- Look at your other household expenses. Can you cut down on water, electricity or gas usage? Do you really need to take four or more outfits to the dry cleaners each week?
- Use money that you save from other household expenses to pay down the principal on your mortgage. Also, use a portion of the money to treat yourself to something that you love each week. It could be as simple as a new, ethnic meal. It could be as wonderful as a deep body massage.
- Listen to people when they tell you that you have a gift. Consider using your gift to advise and consult others, to generate additional income. Put 75% or more of the income that you earn from this work to pay off the principal on your mortgage.
- Take your bonus and overtime pay and start chipping away at your mortgage principal.
- Get serious about paying off credit cards, starting with credit cards that have the highest interest rates. Just paying off one high interest credit card could save you several hundred dollars a month. Invest this savings in your aim to pay your mortgage off early.
- Work up numbers on how much you would save if you refinanced your mortgage at lower interest rates.
A place to worry in is not what you bought your house for
At its core, a house should be a place to create great memories. It should be a place where you know, absolutely know, that you're free to express yourself without fear of ridicule or embarrassment. Step inside your house and you should let your hair down, not curl up on the sofa and start worrying about how you're going to pay next month's mortgage.
Start taking steps early to breakdown how you're going to pay your mortgage. Include how you'll pay your mortgage should unexpected events like job changes or layoffs occur. Be confident that you can continue to make changes, shifts in how you review and meet your financial responsibilities, until the task of paying your monthly mortgage no longer scares you.
You’ve decided to move into an apartment for several months, maybe even a year or longer, giving yourself time to adjust to living on your own before you buy a house. That or you might have moved into an apartment to give yourself time to repair your credit and save a good down payment on a new house. You did your research, visiting at least five apartment complexes near where you live or work. It feels good to know that you finally found the right apartment community. Management is friendly, responsible and knowledgeable. They make you feel like family.
How a new apartment management team could affect your life
Yet, three months into living at the apartment community, you receive a notice that the apartments are moving under new management. The change could be good. It also might not be noticeable to you except when you stop by the management office to pay rent and notice that you’re talking with an entire different set of team members at the leasing office.
General changes that you may notice after a new management team takes over the apartment community where you live include:
Different people manning the leasing office – The new management team may try to keep the current leasing office staff in place. Despite these efforts, don’t be surprised to see people who work in the leasing office exit.
New faces equal new personalities – One of the biggest changes that you’ll experience after your current apartment community moves under different management has to do with personality. Quiet and reserved staff at the leasing office may be replaced by more outgoing, risk tasking personalities. Again, this may not be driven by the new management, but due to the fact that former leasing office staff exited after the new owners bought the property.
Community events – The numbers and types of community events may change. For example, if the former leasing office staff distributed birthday cards to tenants on their actual birthday, the new staff may replace that with a quarterly community-wide birthday event at the clubhouse.
Office hours – Days and hours that the leasing office is open may be extended or shortened. Tenants also may be able to pick large packages up at the leasing office for the first time.
Amenities – Upgraded amenities may be apart of the change over.
Maintenance – Similar to changes in leasing office staff, there may be turnover in the maintenance ranks. This change could impact quality of maintenance service, perceived or real. Concerning perception, if tenants hate change, they may devalue anything that the new staff does, even if it’s actually an improvement.
Rental rates – Should this occur, it won’t happen until current leases expire.
New service providers – Trash carriers, electricians and plumbers who handle large projects may change.
New apartment name – The name of the apartment facility may change to reflect the name of the new owners. On the other hand, the name may remain as it is in an effort to avoid disrupting existing marketing and branding efforts.
You may not notice it. However, over time, you can get accustomed to seeing team members at your apartment leasing office. You could even develop friendships with these residential workers. It can make getting used to a new set of apartment management team members difficult. By knowing what to expect, you could reduce your inner struggle to adjust to and accept the shift. You could also develop an appreciation and a thankfulness for the service and support that the new management team provides to you and other residents at the apartment community where you live.
Owning a home seems like a logical step in the game of life that most people take. It’s a good investment and better for your finances than renting. Just because it seems like the right thing to do, doesn’t actually mean that it is the right thing to do for you and your situation. There are a few clear-cut signs that you’re just not ready to buy a home.
Your Income Is Too Low
Even if you think that you make enough money to buy a home, you need to take a look at your own finances before you start looking. You’ll need a large sum of money upfront to buy a home, so saving will need to be our thing. Between closing costs and the 20 percent down payment that you should have to buy the home, you don’t want to spread your income too thin. Financial experts recommend that your monthly mortgage payment isn’t more than around 30 percent of your monthly income.
Debt Has You Pinned Down
Even if you do have enough money to buy a home and make monthly mortgage payments without worry, you may have too many other bills to pay. If you have massive amounts of student loan debt, maxed out credit cards, or other large loans, you may want to think twice before you buy a home. Lenders will look at what’s called your debt-to-income ratio. Your load of debt should be 38% or less of your monthly income. If you have too much debt, it may not only strain you financially, it could prevent you from getting a loan altogether.
You Started A New Job
Lenders like income and job history to be consistent. If you are coming off a period of unemployment or have just started a new job, you could look like an unstable lender. Lenders typically like people who have been doing the same job for about two years or more. If the stability of your income looks uncertain, you may not just look bad to lenders, but you could put yourself at risk as well.
Your Savings Is Depleted
You need more than just the down payment saved up to be in a good place to buy a home. There will be plenty of things that you’ll need once you move into a new place including furniture to repairs to renting a moving truck. You should have some additional money on hand in case of an emergency as well.
Buying a home is a huge financial commitment. You should be absolutely sure that you’re ready for the commitment before you dive in.
The benefits of owning a dog are immense, but the importance of training them effectively and from the beginning can't be overstated.
Assuming you're adopting a healthy, happy puppy from a reputable breeder or pet shop, then training should only require some basic knowledge and a lot of patient repetition.
Well treated puppies and dogs are not only eager to please their owners, but are often quite intelligent and relatively easy to train.
If you're not an experienced dog owner, there are several options for making sure your dog gets the proper training it needs.
- Dog obedience classes are often available locally through pet stores, dog daycare centers, and individual trainers. In many cases, dog owners actively participate in the classes so they can learn the training and behavioral modification techniques they'll need to use at home. It's generally a good idea to research two or three local dog training services before deciding on the one that would best serve your needs, your training goals, and your budget. Since dogs are like members of the family, it's important that you feel comfortable with the dog trainer's personality, their level of experience, credentials, and rapport with you and your dog.
- How-to manuals, training videos and websites are available for dog owners interested in taking on more of a DIY approach to dog training. You can pick up a lot of free tips and training techniques from articles, blogs, and free videos online, but apply the same quality standards to an online expert that you would with an in-person trainer. They should be experienced, patient, professional, and credible. In most cases, it's pretty obvious whether those qualities are present, especially when you've viewed online videos from several sources and have points of comparison.
- Network with other dog owners you know to compare notes, training techniques, and behavior modification tips. In general, dogs respond favorably to patient repetition of verbal commands and visual prompts, enthusiastic praise when they get it right (positive reinforcement), and, of course, dog treats.
There are effective and ineffective ways to train your dog and curb undesirable behaviors, so it pays to do some online research, get a dog training manual or DVD, take classes with your dog, and/or hire a professional dog trainer. If you just try to train your dog based on logic, general knowledge, and intuition, both you and your dog will end up feeling frustrated with the process and the outcome.